Game Plan Where we are? • Declining Revenues
• (1)% in 2014 • Declining trend in 2015
• Declining same store guest count by 3.6% in 2014
• Unclear Positioning • Changing customer
preferences • Losing market share to
competitors • Offering simpler menus
and customized burgers under the same brand
• Disgruntled Franchisee owners
Where we want to be? • Consistent revenue growth by
2% in 2016 and 3% in the next 4 years
• Regain lost guest count and increase by 5%
• Clear Positioning • Tackle changing needs by
introducing a new brand for customized products
• Streamline existing business
• Consistent menu optimization
• Long term relationship with franchisee owners
ROOTS &
SHOOTS
Company
Strengths - Well-known brand - Big marketing budget - Strong purchasing power - High operational efficiency - Strong international presence to hedge risks - Franchise model to generate revenue streams
Weaknesses - Unclear vision - Too big to change - Complex menu - Long servicing time - Associated with unhealthy food image
Opportunities - Growing international F&B consumption - Diverse customers’ food preferences
Threats - Rising competition - Changing customers’ tastes - Disgruntled franchise owners - Increasing costs of production
SWOT
Customers
• Quest for readily-available food • Complex menu lengthening servicing
time
• 1st-tier: value for money and cheap food options
• 2nd-tier: Customized healthier options willing to pay a premium
à Gap in value proposition
Context – Issues at hand
• Increasing costs of production
• Changing political dynamics e.g. Russia
• Economic cycles in different countries
• Change in leadership internally and organizational restructuring
Collaborators
Franchisees
• Disgruntled • Revenue decline • Guest count decline • Complex menu (growth by
70%) • Company’s plan to shift from
81% to 90% franchising by 2018
Suppliers
• Quality issues • Bargaining power of McD
because of the volumes • 3 legged stool strategy
allows a long term relationship
Competitors Aspect McD KFC Taco Bell Shake Shack Chipotle Food Type Fast food –
quick, convenient and cheap, first mover with long history and customer base
Fast food Fast food Fancy and revolu>onized burger
Healthy food op>ons
Revenue Performance
Decline by 2% in 2014
Decline NA Growing Growing
Price low price $1-‐5 dollar burger
low price high price – premium burger
Markets Interna>onal Interna>onal mainly in the US mainly in the US
Declining revenues – Unclear Positioning – Growing Competition – Changing Customer Preferences
Decision Matrix A.
Stick to traditional fast food business
B.
Revolutionise McDs to meet
fancier demands
C. Incorporate A
& B under McDs
D. McDs stick to
roots; Establish NEW Brand to meet fancier
demands Reaching maximum
customers
Sustainable model
Cost of implementation
Ease of implementation
Building brand equity
Total score
2 1 4 5 3 15
2 2 1 2 3 10
*5 being highest
3 3 2 2 2 12
4 4 2 3 5 18
Decision Matrix A.
Stick to traditional fast food business
B.
Revolutionise McDs to meet
fancier demands
C. Incorporate A
& B under McDs
D. McDs stick to
roots; Establish NEW Brand to meet fancier
demands Reaching maximum
customers
Sustainable model
Cost of implementation
Ease of implementation
Building brand equity
Total score
2 1 4 5 3 15
2 2 1 2 3 10
*5 being highest
3 3 2 2 2 12
4 4 2 3 5 18
Roots (McDonald’s fast food :
“Golden Arch to Happiness”
Shoots (New brand on
healthy foods): “The Choice is
Yours” Roots & Shoots
Strategy
McDonald’s Return to Roots : “Golden Arch to Happiness”
• Build localized teams to strengthen customer relations and franchisee relations • Quarterly menu optimization process • Revamp food safety auditing procedures • Consistent scrutiny of suppliers’ products • Remove “ in-store customization” – leads to operational efficiency. • “Franchisee incentive” scheme.
Operations
• Focus on high-growth markets(10% revenue) and foundational markets • Cultural and festive promotions to heighten sentimental tie-up with McDs • Offer delivery and drive-thru services to increase customer base • Customer Loyalty programme (points-system to reward customers with unique service
offerings e.g. birthday/anniversary parties) • Target corporate and sports events
Revenue Generation
• Promote collaboration and sharing of best practices between stores and franchisees
• Develop a platform for sharing of ideas to gauge customer preferences e.g. McDs Idea of the Month Competition
• Continuously develop and test new products (within the bandwidth of traditional fast food) to upgrade suite of food offerings
Innovation
McDonald’s Return to Roots : “Golden Arch to Happiness”
• Set at mass market price points • Seasonal product and coupon promotions
Marketing - Price
• Dispose in-store burger customization and return to consistent food menus • Maintain highest standard of cleaniness and food quality with transparency • Every month sell one burger that has been a superhit in another country.
Marketing - Product
• Return to roots: “Golden Arch to Happiness” • Step up CSR efforts to offset increasingly negative public health concern
Marketing - Promotions
• Increasing franchising in existing business especially in developing markets
Marketing - Place
• Enhance contingency mechanism and take immediate shock absorption procedures • Conduct immediate audits and press conferences to clarify issues when crisis arises
Public Relations
McDonald’s Return to Roots : “Golden Arch to Happiness”
McDonald’s New Brand: Refresh “The Choice is Yours”
• New brand focusing on healthier F&B options with Self-owned outlet • Geographically start from the US and international lead markets as these
are relatively mature markets with higher demand for healthier foods • Supported by strong R&D team on customer preferences and health foods • Core executives to oversee new brand launch
Business Model
• Through premium pricing strategy • In the long-term, the new brand can go on franchising model
Revenue Generation
• A premium of 40 - 50% of the current McDs price • Super Premium products at100% premium
Marketing - Price
• Soups, customized salads, fresh juices and bundled meals. • Customized wraps and rolls using high quality and fresh ingredients
Marketing - Product
• Highlight on healthy lifestyle and food ingredients • Tie-up with hospitality partners
Marketing - Promotions
• Difference locations from McDs. • Good corporate heavy locations.
Marketing - Place
McDonald’s New Brand: Refresh “The Choice is Yours”
Estimated - Revenue Outlook
Assumption: • 2015 revenue projected by 2 times over 1st half • 3% growth rate in existing business • 5% growth rate in new brand in first 2yrs, 10% growth rate in new brand from
2018 onwards
15,000
20,000
25,000
30,000
35,000
2013 2014 2015 2016 2017 2018 2019 2020
McD Revenue Trend -‐ in $mil
Revenue -‐ Golden Arch Revenue -‐ New Brand
Estimated - Business Portfolio
96%
4%
2016
Exis>ng Business
New Brand
95%
5%
2020
Exis>ng Business
New Brand
Assumption: • 3% growth rate in existing business • 5% growth rate in new brand in first 2yrs, 10% growth rate in new brand from
2018 onwards
ROOTS
Timeline Short Term 2016-2017
Long Term 2018-2020
SHOOTS
• Revamp food auditing processes
• Quarterly menu optimization process
• Innovative ideas collaboration
• Long term relationship management with franchisees and suppliers
• Customer loyalty programs
• Develop strong R&D teams
• International expansion with franchisee heavy
• Launch new brand in July 2016
• Focus on healthier FnB options with self owned outlets
• US